China's inflation rate hits 11-year high

China's trade surplus for the first 11 months of the year came to $239.3 billion, easily eclipsing the $177 billion total for all of 2007 despite weaker demand from the United States.

Exports climbed 22.8 percent and imports were up 25.3 percent in November from a year earlier, broadly in line with October.

"Even though China's exports to the U.S. have slowed down, its exports to the euro zone and the Middle East and other non-traditional markets have held up really well," said Tao Wang, chief economist at Bank of America in Beijing.

The United States and Europe have been piling pressure on Beijing to let the yuan appreciate more quickly to help rein in exports, and economists have said a faster rise in the currency could also help control inflation.

Zhou Xiaochuan, the central bank governor, said that although a stronger exchange rate was not the key to reducing the trade surplus, China would let the yuan move more freely next year.

"From the beginning, we have said that we would continue to deepen exchange rate reform and increase the flexibility of the yuan's exchange rate," he said.

In an apparent move to soften U.S. complaints ahead of the bilateral talks, the central bank set a yuan trading midpoint on Tuesday of 7.3793 per dollar, the highest level since it revalued the currency by 2.1 percent in July 2005 and unpegged it from the dollar to float in managed bands.

The yuan has since risen a further 9.9 percent.

(Editing by Alan Raybould)